Perrigo focuses on driving growth, ‘operational excellence’

Six months into his tenure, Perrigo Co. plc CEO Uwe Röhrhoff is focused on accelerating growth.

Röhrhoff joined Perrigo in January, succeeding John Hendrickson. He previously ran Germany’s Gerresheimer AG, a producer of pharmaceutical packaging and medical devices for the storage, dosage and administration of drugs.

Since then, he and Perrigo executives have spent an “extensive amount of time” looking at ways to accelerate the company’s growth across its three business segments, which “are coming at each of their respective markets from positions of strength,” CFO Ron Winowiecki told investors last week in a presentation at the Jeffries 2018 Global Healthcare Conference.

Rather than steer Perrigo — which is domiciled in Dublin, Ireland, but run from Allegan — in another direction, the new CEO is focused on “operational excellence” and generating higher growth in the consumer health care divisions in the U.S. and Europe and for its generic drug unit.

“To be clear, this is about value creation,” Winowiecki said. “This is about looking at great assets with great positions in their markets and how do we accelerate growth based on the assets that we have.”

A producer of store-brand, over-the-counter medications and generic drugs, Perrigo hired Röhrhoff to succeed Hendrickson, a longtime executive who led a turnaround of ailing European operations and retired in April.

The Consumer Healthcare International division, which Perrigo formed with the 2015 acquisition of Belgium-based Omega Pharma NV for $4.5 billion, generated organic growth of 3.5 percent in the last 12 months and is generating a margin of 15 percent, Winowiecki said. Perrigo’s guidance for the division is for a margin in the mid-15 percent to 16 percent range.

“We are very pleased with the performance of that business as we stand here today,” Winowiecki said. “We like the business. We like where it’s positioned. We’re seeing very good growth at this point.”

Perrigo is pursuing acquisitions in Europe, “but it’s not necessary” to grow, he said.

The Consumer Healthcare International division in Europe generated $401 million in sales in the first quarter of 2018, an increase of 7 percent from a year earlier. Excluding $22 million in sales from a Russian distribution business Perrigo exited, plus favorable currency rates, the division’s sales grew 1.4 percent for the quarter.

Perrigo’s overall net sales increased 1.9 percent to $1.21 billion for the first quarter of 2018 with net income of $82 million, or 57 cents per share. Brokerage analysts expect Perrigo to record second quarter sales of $1.24 billion, according to a consensus estimate at Yahoo Finance.

As Perrigo seeks to accelerate growth, e-commerce will play more of a role, Winowiecki said.

Over the counter (OTC) medications are backed by pull marketing to draw consumers to the products, particularly those used on a continuous basis such as for allergies and nutrition. In e-commerce, Perrigo can layer on push marketing that reminds consumers their medication is running out and encourage them to buy more, and to introduce them to other OTC products as well, Winowiecki said.

“We think store-brand share is only going to grow as you digitize and e-commerce becomes a solution that consumers use relative to buying these products,” he said.

Perrigo entered a partnership with Amazon.com three years ago that now involves 50 products, Winowiecki said. The partnership began using the “Good Sense” label for Perrigo customers unable to invest in their own OTC brand and has since moved to a direct label for Amazon, he said.

Given its production and distribution capabilities and position in the OTC store-brand market, Perrigo is the “natural partner of choice” for Amazon, Winowiecki said.